These frequently asked questions (FAQs) are designed for CFOs, promoters, and decision makers managing multi-crore operations in India’s industrial hubs. They cut through the jargon and bring practical clarity to unsecured business funding, what’s real, what’s negotiable, and what’s completely dependent on the strength of your balance sheet.
Unsecured Business Loan FAQs
Unsecured business loans can be a great financing option for businesses that need capital but don’t have collateral to offer. Here are some frequently asked questions to help you understand them better:
1. What is the difference between Secured and Unsecured Funding?
The major difference between them is in collateral availability. An unsecured loan is a business loan with no collateral. There is an absence of collateral, and the whole process depends upon the creditworthiness of the borrower. Here, the ROI is higher, but the process is quick. Whereas in secured loans, collateral-based loans are provided, which puts the lenders on the safer end of non-payment of the amount.
2. Why is the CIBIL important for unsecured business funding?
CIBIL is the credit score that the bank uses to assess the borrower’s repayment capacity. The borrower’s good credit score helps facilitate the easy disbursement of the loan. Also, an unsecured loan provides finance without collateral; hence, the CIBIL score is of utmost importance to check whether the borrower has a creditworthy relationship with the bank and the capacity to pay the loan in the mentioned period.
3. Who can apply for unsecured debt?
Any company or proprietor/promoter without sufficient collateral assets but with demonstrable cash flow, good business length, and solid industry standing. For example, medium-sized manufacturing units, service firms in telecom/IT, hospitals, biotech startups in metro or industrial zones of Pune, Mumbai, Bengaluru, Hyderabad, Delhi, Chennai, etc.
4. How much amount can be raised in unsecured funding?
There are no fixed criteria for raising finance of unsecured loans. Many lenders provide amounts up to 25 lakhs. At Terkar Capital, we can raise unsecured funding to 15 Cr as per the borrower’s requirement.
Hence, your business size, sector, and financials will matter a lot.
5. What are unsecured business loan interest rates?
The RoI is dynamic and hence changes according to the market segments. So there are no fixed criteria based on ROI. However, at Terkar Capital, the starting interest rate is cited at 14% p.a. (depending on the financials).
6. What is the maximum amount of unsecured loan can I get?
It is an unsecured loan; most financial institutions don’t take loan exposure of more than Rs. 50 lacs. However, at Terkar Capital, you can get a credit exposure of up to 15 Cr. The turnover and profitability of your business are a few of the major factors to determine the exposure taken by financial institutions.
If your business is in a high-growth vertical (IT, EV manufacturing, automation, pharma) and based in a metro/industrial area ( of Pune, Mumbai, Bengaluru, Chennai, Delhi, etc), you get higher exposure.
7. How much time does it take to get the UBL?
An unsecured loan is also known as a quick business loan. This is because the turnaround time to get the funds in your accounts will be as low as 7 working days. Within 7 working days, you will get your funds disbursed.
In a real situation, the time can vary depending on documentation, industry, amount, lender’s internal process.
8. What is the tenure of the unsecured loan?
An unsecured loan is given for a maximum of 3-5 years. Your financials and future business can be a few of the factors that may help you to extend a couple of months for the repayment.
9. How should I repay that loan?
An unsecured business loan is as good as any other loan. Here you can make the repayment in Equated Monthly Installment and can arrange through ECS.
10. Can unsecured funding be used for small business financing?
Yes. Businesses without large collateral, including small or medium enterprises, can access unsecured funds provided they meet creditworthiness and cash-flow criteria.
11. Where can we apply for unsecured loans?
There are several Financial Institutions, NBFCs, and banks that work for providing unsecured loans in India. One has to have a proper direction to search for. Terkar Capital is the ideal platform that can provide you with opportunities for both debt and equity funding.
12. How to get an Unsecured Business Loan?
Since this is the modern time, many NBFCs and financial institutions receive applications through online mediums. It has made the unsecured business funding procedure cost a lesser amount of time. Check out the steps:
Step 1
The first step is checking the eligibility criteria. If the business meets the unsecured business funding requirements and is eligible to obtain the loan.
Step 2
Preparing the application is the next step. A well-written application with all the sufficient required details. That includes asset count, the company’s track record, etc. Why is this loan being obtained? Things like these have to be mentioned in the application.
Step 3
If you use an online medium, then the documents are uploaded online. Presenting documents, softcopies or hardcopies is the third step to obtaining an unsecured business loan in India and overall.
Step 4
Get the funds. You can receive funds after the former step. Thus, now you are enabled to address the financial difficulties your firm is facing.
13. How does Terkar Capital helps?
Being one of the most modernized and highly specialized finance facilitators in India, we understand the requirement and the urgency of the funds for your business. Terkar Capital always tries harder to arrange the best financial services for all our customers and make the process convenient. Unsecured funding is one of our best services, and our team of experts helps effortlessly to arrange all the possible outcomes to make the process hassle-free.
How do we execute the unsecured funding proposal?
14. What types of services are provided in unsecured funding?
Here is the list of a few of our Unsecured Instruments:
- CGTMSE Loan
- Working Capital Loan
- Trade Finance
- Factoring
- Bill Discounting
- LC Discounting
- Bank Guarantee
Check out the unsecured debt products we facilitate.
15. Can a hospital or healthcare chain expand using unsecured loans?
Yes, particularly for capacity expansion, equipment upgrades, or digital transformation. Given healthcare’s steady cash inflow, unsecured loans are a viable option for well-performing hospitals.
16. Can an established manufacturing unit get higher unsecured exposure?
Yes, provided there’s a strong financial history, audited statements, and proven capacity utilization. Manufacturing companies in industrial belts like Pune, Mumbai, Hyderabad, Delhi, Chennai, and Ahmedabad often receive higher exposure through Terkar Capital due to transparent financial ratios and verified working capital cycles.
17. Do promoters’ guarantees still apply in unsecured corporate funding?
In many cases, yes. While no tangible collateral is pledged, financial institutions often seek personal or corporate guarantees. Terkar Capital negotiates these terms, ensuring the promoter’s liability remains proportionate to business exposure.
18. How does unsecured debt support businesses in SEZs & MIDCs?
Companies in industrial clusters benefit from ecosystem reliability, consistent power, logistics, and access to workers. Financial institutions view these zones as low-risk geographies. Thus, we at Terkar Capital leverage this context to improve the borrower’s case and secure higher exposure limits.
Learn in detail about the Unsecured Business Loan guide here.
Recently, my cousin mentioned she’s working hard to start a company this year, but she hasn’t found the right financing option for her. That’s why I’ll share your article with her and suggest she looks at unsecured loans since they’re for businesses that don’t have any assets as collateral. I appreciate your tips on who’s able to apply for unsecured business loans.
Thank you, Eli, for sharing your cousin’s situation and for considering sharing the article on unsecured business loans with her. It’s great to hear that she is determined to start a company this year and I hope that the information on unsecured loans can be of assistance to her in finding the right financing option.
Unsecured loans can indeed be a viable option for businesses that don’t have any assets to use as collateral. It’s important to note that while unsecured loans may not require collateral, they usually come with higher interest rates compared to secured loans. Additionally, not all businesses may be eligible for unsecured loans, and it’s crucial to consider the criteria set by the lender, such as credit score, revenue, and time in business.
Unsecured business loans can be a lifesaver for small businesses, especially during tough times. The FAQ section in this blog post is very informative and answers some of the most common questions businesses may have about unsecured loans.”
Thank you for your positive feedback on our blog post about unsecured business loans. We are delighted to hear that you found our FAQ section informative and helpful in addressing some of the most common questions businesses may have about unsecured loans.
At Terkar Capital, we understand that small businesses often face financial challenges, especially during tough times. Our goal is to provide flexible and affordable financing solutions to help businesses overcome these challenges and achieve their financial goals.
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